In today’s market when so many people are looking for the best deal possible, “short sale” has become a bit of a buzzword.
Though the name might sound a little suspicious, short sales are actually a regular occurrence in the real estate world. If you’re someone looking for a home, a short sale could bring you a great deal on a house. If you’re a homeowner in over their head, a short sale could save you from foreclosure.
Today, we’re breaking down what exactly a short sale is. At Real Time Home Search, we have extensive experience dealing with short sales.
Short Sale Definition
A short sale is when someone sells their home for less money than they owe on their mortgage. Because of this, it is an action which the bank or lender must first approve. Why would the lender allow a person to do this?
Because it’s potentially more beneficial for them than a foreclosure would be.
Why would a homeowner put their home up for short sale? There are a number of reasons actually.
Why Home Owners Short Sell
Typically, a short sale requires some sort of financial hardship. Often, it’s a situation where either they short sale or they foreclose. Possible causes for short sales include but are not limited to:
- Need to liquidate debt
- Lapsed mortgage payments
- Your home’s worth is less than you owe
- You lack the means to afford your home any longer
The Advantages and Disadvantages of Short Sales
Many find a short sale to be preferable to a foreclosure. Still, it’s not a perfect exit strategy.
On the down side, your credit will take a big hit. Don’t expect to get any new loans or mortgages for a while. Also, naturally, you’ll lose your home and you may have to keep making mortgage payments till your balance is made up.
The good news is a short sale doesn’t ruin your credit record in the same way a foreclosure does. While a foreclosure will stick with your for seven years, you may overcome a short sale in just two! Also you get the experience of actually selling your home rather than having it taken away from you.
If you’re out of options, a short sale might be the way to go. If you’d like to know more or could use a bit of help, you can contact us here.